NWMLS: Pending and Closed Home Sales Slow in January

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January market stats were published by the NWMLS yesterday. Before we get into our monthly stats, here’s a quick look at their press release.

Lack of inventory “a game changer” for home buyers
Depleted inventory is contributing to “overwhelming” traffic at open houses, shifts in strategies for both buyers and sellers, and escalating prices, according to officials with the Northwest Multiple Listing Service.

Dick Beeson, a former chairman of the MLS board, said the lack of inventory in almost every county is, “without question, a 2016 game changer.”

We have been in an extremely low-inventory market for going on three years now. How is a continuation of a years-long trend “a game changer”? Ridiculous hyperbole.

CAUTION

NWMLS monthly reports include an undisclosed and varying number of
sales from previous months in their pending and closed sales statistics.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

January 2016 Number MOM YOY Buyers Sellers
Active Listings 1,934 +9.6% -27.9%
Closed Sales 1,314 -36.2% -1.9%
SAAS (?) 1.02 +1.8% -0.3%
Pending Sales 1,812 +22.8% -15.3%
Months of Supply 1.47 +71.7% -26.4%
Median Price* $490,970 -3.4% +11.2%

After setting new all-time low inventory levels in November and December, we actually saw a decent increase in January. Last month was still the lowest inventory level ever seen in a January, but at least unlike last year, we did see an uptick from December.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales fell off dramatically from the month earlier, and notched their second year-over-year decline in the last three months. Interestingly the December to January dropoff in closed sales was the largest month-over-month decrease we have seen in this statistics since January 2005. Meanwhile, the 15 percent year-over-year decline in pending sales is the largest dropoff we have seen since April 2011.

There was definitely a softening in the sales stats in January. It will be interesting to see if it is a blip or the start of a trend.

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Total inventory is at its lowest January level by a longshot. New listings are also still depressed, so it’s doubtful we’ll see this number climb much in the next few months unless the January slowdown in sales picks up steam over the next few months.

Here’s the supply/demand YOY graph. “Demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade (unlike pending sales from NWMLS).

King County Supply vs Demand % Change YOY

The red demand line went back into buyer’s territory again in January. The blue supply line is still deep in seller’s market territory, but the 8.2-point increase from December to January was the largest bump since May 2013.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Year-over-year price growth decreased from +15.5 percent in December to +11.2 percent in January.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994 (not adjusted for inflation).

King County SFH Prices

The median home price dropped back into that $480,000 to $500,000 range it was in between April and November of last year.

January 2016: $490,970
July 2007: $481,000 (pre-2015 high)

Here’s this month’s article from the Seattle Times: Shortage of homes for sale pushes prices upward, buyers outward

Check back on Monday for the full reporting roundup.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

64 comments:

  1. 1
    Deerhawke says:

    I posted a version of this at the very end of the last thread and thought it might be better here.

    ———
    When you look at the sales figures here and in today’s Seattle Times, it appears that we have definitely arrived at the point where a lack of inventory is pinching off sales. There is no real standing inventory left. If there are no new new listings, there can’t be any new pendings. Factoring in friction, it is pretty much a 1 to 1 input-output ratio.

    So while you might think that a decrease in sales volume is good for buyers and bad for sellers, that is a superficial view– it is not really the case here. The reason for why we have fewer sales matters. In this case, it is not because of a weakening market. If sales are down because listings are so very far down, there is no question that it is good for the few remaining sellers, but not good at all for buyers.

    One other think you might infer is that the lack of inventory and high prices are diverting sales south. If you look at the figures in the Seattle Times today, sales were down in Seattle, the East Side and North King County, but they were up in Southeast and Southwest King County. Interesting to note that the couple profiled in this morning’s Times article wanted to buy in West Seattle but ended up buying in Burien. I think you will see a lot more of that.

    And the median price in Seattle broke $600,000 for what I think is the first time. It was up 19.5% from last January’s $517,500 to $618,450. A cool hundred thousand dollars increase in one year. Wow.

    So the question is whether this is a bubble or whether this is just the new normal. I have seen both. In the late 80’s I was living in Manhattan and watched condos on the Upper West Side double in value in a year. The received wisdom said it was a bubble, but guess what–- the price never went back down. In 2007, I sold most of the lots I owned because I was sure it was a bubble– and it was.

    If I were to bet on this (and I do with my dollars and actions), I would say this is a fundamental change in the market rather than just a temporary bubble.

    Pure and simple, we have a lot of people moving here from all over the country. There are jobs here and people want this lifestyle. The people who were already here don’t seem to be inclined to sell their houses and leave. And it is hard (and expensive) to build new for-sale housing. We have natural and legislative growth constraints that restrict development. As a result, little is coming on the market and whatever does triggers multiple offers and gets substantially bid up. Overall, it is really all about rising demand and restricted supply.

    A friend believes that the only thing that will bring down the price of housing in Seattle is getting hit by the inevitable “big one.” But then I pointed out to him that after Katrina the price of housing in New Orleans went up dramatically.

  2. 2
    ChristianW says:

    I’m having a really tough time deciding whether to sell or rent out my 4br/2ba sfh in bellevue. I’m moving away for work reasons this summer and will be gone for approx 2-3yrs.

    Should I sell and take the guaranteed cash, while risking loosing out on appreciation over the next 2-3 yrs, or should I break even on costs while collecting rent (assuming general wear and tear, noting significant and collecting rent 11 months/yr), and potentially deal with a bad tenant and/or potentially capture appreciation? What would you do?

  3. 3
    Scotsman says:

    Meanwhile, up in Canada…… Is this Seattle’s future? Look what $6+M used to get you:
    http://www.zerohedge.com/news/2016-02-05/these-vancouver-homes-sold-millions-2011-and-have-been-vacant-and-rotting-heres-why

  4. 4
    Deerhawke says:

    Every time you sell, you lose a tremendous amount in transaction costs– normally 8 percent. Why not leave it here as a place-holder in this economy if you are coming back?

  5. 5
    ess says:

    By Scotsman @ 3:

    Meanwhile, up in Canada…… Is this Seattle’s future? Look what $6+M used to get you:
    http://www.zerohedge.com/news/2016-02-05/these-vancouver-homes-sold-millions-2011-and-have-been-vacant-and-rotting-heres-why

    As per what is Seattle’s future – here is another article about what is happening in Vancouver and what may happen in Seattle in future years…..

    http://www.vancouversun.com/opinion/columnists/barbara+yaffe+will+2016+year+condo/11698027/story.html

  6. 6
    ess says:

    Deerhawke –

    I think you make interesting and valid points.

    To add to your discussion, the difference between the bubble years and the situation at hand in Seattle and area is the rental market. Not only is the rental market tight, but average rents are also substantially higher. In the bubble years in Seattle, I noticed that rents did not support the price for comparable housing, and as a very small time rental investor, not only was I paying attention to that phenomena, but was concerned. My problem was that I didn’t recognize the extent of the bubble – I figured the correction would be ten percent or so. Whoops.

    You discuss those who wish to buy in Seattle looking south. It is also happening north. South Snohomish County had significant increases in prices, as well as a lack of housing stock for sale.

    Of course there is no guarantee of what the future holds, but I think your analysis of the immediate future is the correct one.

  7. 7
    Eastsider says:

    Seattle has become a tech hub and current property prices reflect that. That said, we also lived through the aftermath of the 1999 tech bubble that adversely affected property values. Will the current tech bloom crash? The stock price of one of our local tech stars Tableau Software just crashed. My bet is more will follow. Without the bubbly stock market, these tech workers and the Chinese will have to pull back which will put a break on price increases and ease the inventory shortage. This should happen by late summer.

  8. 8
    Anonymous Coward says:

    RE: ChristianW @ 2 – You say you’re going to be gone for 2-3 years, which implies you’ll be back in 2-3 years. If you like the house and want to live there when you get back, I’d say keep it and, at a minimum, save the transaction costs. The other reason to consider keeping it, even if you’re planning to change houses when you return, is that it will give you a place to live while you take your time to find a new place to live. Otherwise you’re stuck with buying something out of whatever selection happens to be available during your first 2-3 weeks when you get back. Sure, your fall back could be going into a rental if you don’t like what’s available during those 2-3 weeks, but you’re not going to have enough time to deal with all the relocation stuff, and look for a place to buy, and look for a place to rent.

  9. 9

    In Dick Beeson’s defense, he’s talking about a broader area than King County. On other other hand, I don’t know that the other counties have the same inventory issues, because I haven’t looked at more than four recently, and even then I haven’t been looking at total inventory.

  10. 10

    RE: Scotsman @ 3
    Yes Scotsman

    I’d try and sell it to some dummy cash bags in China….they still have 25% of their wealth left after this stock PLUMMETING….they’ll buy it and risk life in a Chinese prison. There’s a stupid sucker born everyday. Nice article Scotsman, pictures are a 1000 words. I bet the roofs are old and leaky too, that mildew odor in the Winter is water leaking between the sheet rock walls, you can’t see it. A great Seattle home type investment? Not.

  11. 11

    RE: Eastsider @ 7
    The Establishment Lies About Facebook and Microsoft are Known Now

    These companies did fine on simple computer programming with most of their employees local high school and some local community college in the 90s through the early 2000s. And H-1B foreign degreed are a joke compared to our public high schools and colleges and we “speak and understand English” well.

    BTW: Bill Gates does not have an American technical degree either. Enough said. He has no engineering degree credentials to make those calls.

  12. 12

    RE: Anonymous Coward @ 8
    Renting From Another State

    My daughter lives in my Kansas rental. Thank God.

    Without her there I’d have to:

    Get a landlord license and inside home inspection by the County [requiring 10s of 1000s in remodeling?].
    Pay a home sitter Realtor fees to watch it as you rent it out too….Kansas requires it.
    Pay taxes on the FULL rent anyway.
    Get no rent when its vacated.
    Fix the furnace, water heater, air conditioner, etc, etc [ask me, I put $5000 into these items already].

    IOWs, $0 rent to my daughter [or other family] is the best deal out there [Seattle too?] for a landlord. Its FAR less risky and COSTLY. Sell it, don’t be a stooge landlord.

  13. 13
    whatsmyname says:

    “The median home price dropped back into that $480,000 to $500,000 range it was in between April and November of last year.”

    True, as far as it goes. But by visually fitting the lines…… last January fell into the $430,000 to $470,000 range of the previous year’s April-November. And 2014’s January fell into the $400,000 to $430,000 range of 2013’s April-November. That is some pretty consistent range creep. I think a YOY $50,000 median price increase is significant in its own right. Rent and grow rich?

  14. 14
    Blurtman says:

    Sammamish Incline update:

    214 210th Pl NE, Sammamish, WA 98074

    1/20/2016 $815,000.00 KIRKLAND COMMERCIAL REALTY LLC, MYERS DANIEL EDWARDS

    3/18/2015 $705,000.00 NORTHWEST TRUSTEE SERVICES INC, KIRKLAND COMMERCIAL REALTY LLC

  15. 15
    Scotsman says:

    ” this is a fundamental change in the market rather than just a temporary bubble.”

    I’m going with Deerhawke’s analysis above. It’s not a bubble- people can afford to pay the current prices. Maybe not in everyone’s circle of friends, but deals are getting done. And so far they appear to be financed with real income/asset backing, not the crap loans that led to 2007’s collapse. For now we continue to roll forward.

    I have to say the low inventory is a bit of a mystery- lots of speculation but few real facts regarding why folks are hanging on. At this point few if any are still underwater. Future expectations about the coming market and personal opportunities rule the decision process- but in what way?

    Looking forward I expect steady increases and then a leveling/slowing, but no collapse. My hunch is that it’s tech incomes, not stock wealth, that fund current purchases so the equities markets may not be as influential as we think. A double income tech family has a lot of money to throw around, especially at the $1M and under market. As long as employment in the region continues to grow prices go up.

  16. 16
    ess says:

    RE: Scotsman @ 15

    I’m going with Deerhawke’s analysis above. It’s not a bubble- people can afford to pay the current prices. Maybe not in everyone’s circle of friends, but deals are getting done. And so far they appear to be financed with real income/asset backing, not the crap loans that led to 2007’s collapse. For now we continue to roll forward.

    As per the quote by Scotsman above – that is a very important point. While there is much consternation at both the high prices of both housing and rents in the Seattle area that makes for dramatic media coverage, housing continues to be both sold and rented. Most housing that is for sale eventually gets sold at those so called outrageous bubble prices – often in a matter of a short time through multiple offers. While rents have escalated dramatically over the past few years, there are record low vacancies and keen competition for many units that do come on the market.

    Both housing prices and rents are like taxes – while there is much complaining and discussion about the escalating amounts and calls for reform – they continue to get paid as they increase over the years.

  17. 17
    Sherri says:

    Here we go!
    “Where’s the kaboom? There was supposed to be an earth-shattering kaboom!” When talking about another bubble bursting.
    The kaboom now has a name, place, and can be seen and heard by anyone brave enough to not avert their eyes or ears.
    It’s called LinkedIn™.
    http://davidstockmanscontracorner.com/dotcom-2-0-the-crash-sequel-unfolds/

  18. 18
    Eile says:

    My amazon friend wanted to buy a house until few ago. Now he is waiting for stock price to recover first before he buys. Lol

    I think if amazon is gone, all the tech worker in seattle will leave, many companies need amazon will go under too. That the only way to fix the seattle housr market.

  19. 19
    Sherri says:

    RE: Eile @ 17 – Agree. If the tech bubble bursts, Seattle housing prices will deflate. We are joined at the hip with “Silly Valley.”

  20. 20
    Blurtman says:

    Market tanking again. Some folks think that will negatively impact the RE market, but on the other hand, maybe RE is the best place to be now. Point/Counterpoint.

  21. 21
    Scotsman says:

    One of the things I’ve come to appreciate over the years is the sheer momentum of the economy. Keep in mind the standard definition of a depression is a 10% drop in GDP. That leaves 90% of the economy intact. And while a 10% drop in activity is significant- it isn’t the end of the world as 90% continue to march forward. No one is talking about a pending depression. What is being discussed is years of flat/slow growth for the majority of the economy and a correction in equity markets and especially high end financial instruments- derivatives, currency swaps, etc. If/when those fall apart your average tech home buyer isn’t going to be hit. The super rich and financial institutions will take the hit. Most won’t even notice a change in their daily lives. And a change in stock prices has very little to no impact on daily operations. How many of the new tech workers are even vested and able to access stock at this time?

  22. 22
    Sherri says:

    RE: Scotsman @ 21
    In what is becoming a trend on the weekends, Global Equities Research Trip Chowdhry smashed out estimate for 333,000 layoffs in the Technology sector.

    According to Chowdhry, Back Expertise, Products and Services is going to shrink as jobs in the Customer/Functional Domain increase in focus. The latter is focused on cloud services like Amazon.com, Inc. NASDAQAMZN AWS, Google Inc
    GOOG 1.48%
    -cloud based structures, and Microsoft Corporation
    MSFT 1.85%
    Azure and the former is more of a “on-premise infrastructure.”
    Read more: http://www.benzinga.com/analyst-ratings/analyst-color/16/01/6149651/chowdhry-major-tech-layoffs-are-coming-feds-dudley-is-cl#ixzz3zbKBCh7J

  23. 23

    One of the companies that Tim utilizes (Tableau Software–Data) has really been hit hard. 52 week range of about $131 to $37, with today setting the new low.

    Apparently Tim only creating one or two new posts a week is hurting their revenue! ;-)

  24. 24
    Scotsman says:

    Sure, lots of tech equities are over valued- Amazon for example. But a drop to more realistic levels has little to no effect on daily operations. And there will be some layoffs. But what percentage of those Sherri mentions will be in Seattle verses other parts of the country- or even out of country?

    Here’s what I remain focused on- a married couple, say 5 years experience, working in a tech industry at a professional level can easily gross $225-300k. That level of income without consideration for savings, inheritances, parental gifts, or prior equity easily supports home prices up to $1M. $800K @ 4%, 30 yrs is about $3,800/mo., still only 20% of monthly income at $225K/yr. If this is the New Seattle there’s still lots of room for higher prices. Sure, not everybody- in fact few- make that kind of money. But more and more will with every passing month and what may seem out of reach for many is a piece of cake for this new class of buyer.

  25. 25
    Mike says:

    By ess @ 5:

    By Scotsman @ 3:

    Meanwhile, up in Canada…… Is this Seattle’s future? Look what $6+M used to get you:
    http://www.zerohedge.com/news/2016-02-05/these-vancouver-homes-sold-millions-2011-and-have-been-vacant-and-rotting-heres-why

    As per what is Seattle’s future – here is another article about what is happening in Vancouver and what may happen in Seattle in future years…..

    http://www.vancouversun.com/opinion/columnists/barbara+yaffe+will+2016+year+condo/11698027/story.html

    I think you mean Medina/Clyde Hill/Hunts Point/Bellevue’s future, not Seattle.

  26. 26
    GoHawks says:

    RE: Scotsman @ 24 – That buyer’s rate today is 3.25% not 4.00%.

  27. 27
    boater says:

    RE: Mike @ 25
    You know a portion of all luxury houses have always essentially been abandoned or occupied less than a couple days a year. I live near two homes in that class and knew of several more when i had friends in Florida. When you can afford a 5M+ home you can probably afford several. It’s hard to fathom I admit but Ive run into it enough I don’t think it’s all that rare.

  28. 28
    MD says:

    I am literally betting that the ongoing market collapse will be worse than 2008. It’s going to take everyone by surprise. This is more than just the collapse of housing prices. It’s the collapse of something much greater. Everyone feels it, and it’s happening.

  29. 29
    redmondjp says:

    RE: boater @ 27 – You are correct about that. Relatives of a friend of mine made it big in telecom 25 years ago. Their primary house is in Florida (28 bathrooms, annual property tax bill of around $120K), but they also have a condo overlooking Central Park, as well as another house in upstate NY. The two NY properties are empty most of the year.

    I suspect that similar situations exist locally. I used to drive out to the street-of-dreams neighborhoods east of Redmond and look around – pick any non-summer evening after dark, and it certainly appeared that nobody was even home at a high percentage of the homes.

  30. 30
    Sherri says:

    RE: MD @ 28 – Agree. Feels like the wheels are coming off.

  31. 31
    boater says:

    By MD @ 28:

    I am literally betting that the ongoing market collapse will be worse than 2008. It’s going to take everyone by surprise. This is more than just the collapse of housing prices. It’s the collapse of something much greater. Everyone feels it, and it’s happening.

    At least in the US there is no market collapse. A 10% correction which is what we’ve had is a healthy and normal part of the market cycle.
    Could it collapse? Sure but so far all we’ve seen is a normal correction.

  32. 32
    Blake says:

    By MD @ 28:

    I am literally betting that the ongoing market collapse will be worse than 2008. It’s going to take everyone by surprise. This is more than just the collapse of housing prices. It’s the collapse of something much greater. Everyone feels it, and it’s happening.

    Yup… panic is in the air.
    http://blogs.wsj.com/moneybeat/2016/02/09/the-monetary-madness-thats-pushing-japanese-bonds-negative/
    There is an unmistakable whiff of panic in the markets, and we’ve seen several of our sources use that exact word to describe it. Concerns about global economies–and concerns about the banking sector especially–are weighing on traders. In other ways, though, some of this is absolutely mechanical, the inevitable result of those same central bank policies.

    “As of yesterday there was more than $7 trillion of government bonds with yields below zero. We can add to that total with the Japanese 10-year overnight,” noted Lindsey Group’s Peter Boockvar. It’s a situation he deems “monetary madness.”

    The Fed is trying to raise rates, and seeing the market pull them lower. The Bank of Japan is trying to weaken the yen, and finding the market pushing it higher. The ECB is trying to cure the eurosclerosis that has plagued the Continent, and finds growth so weak it may be pushed further into negative rates.

    Nobody is more keen on normalization than the Federal Reserve, which has been trying, ever so gently, to raise rates, not lower them. Now it finds the tide of the markets going against it, and even if the bank wanted to go negative, it may not be able to. A 2010 memo from the Fed is getting attention this morning – “lots of chatter” is how UBS’ Art Cashin described it – which suggests the bank may not have the authority to charge interest–in other words, to take rates negative.
    (end quote)

    The Central Banks have lost control and the big money is running for safety…even willing to PAY interest to keep their money in safe bonds! Not a good situation…

  33. 33

    RE: Blake @ 32
    A Fool Believes the Lie

    Overpopulation and lower wages benefit Seattle….the collapsed stock market proves it. The $1.67/gal deflation gasoline savings are all mostly socked away in savings, not spending….ask SWE….LOL.

    Deflation is here gang, whether ya like or not.

  34. 34

    RE: Scotsman @ 24
    Hey Scotsman:

    Overpopulation wasn’t mentioned in your economic analyses….economists rarely address root causes. Snippet:

    “…Seattle’s population density has increased by nearly 10 percent since the 2010 Census. And if current growth rates continue, we’ll bypass No. 9 Los Angeles within five years….”

    Seattle among top 10 most densely populated big cities in the U.S. for first time ever
    The Seattle Times Sun, Feb 7 5:43 PM PST

    But there’s always room for more Scotsman, look how China’s economy is booming now…..not.

  35. 35
    greg says:

    If a 10% or 20% drop is scary you should not hold stock. This is normal, sure we could see a big drop ,but it will be followed by a big gain.
    I have already put my money where my mouth is. I increased my stock holding about 10% in the last weeks. If we get another good drop from here I will increase again, this time maybe a little more than 10%…

    I truly believe that much of the media fear is about fighting for viewership. As to Wall street, well they live in a hyper fast speeded up market, they live and die by Qs.
    The only advantage we have over the traders is that we can simply ignore the slings and arrows that they must face.
    If the tech market leaders crash housing will most definitely suffer a pull back. But I think that would be a good thing overall.

  36. 36
    Blurtman says:

    The loss to the Panthers and now the Lynch retirement is sending shock waves through the market.

  37. 37
    wreckingbull says:

    RE: ess @ 5 – No bubbly activity to see up there, now is there. Why do these stories of fraud sound so vaguely familiar?

    http://www.vancouversun.com/business/some+real+estate+agents+insider+trading+helping+money/11705662/story.html

  38. 38
    GoHawks says:

    RE: boater @ 31 – Since when is a 13% S&P 500 decline be considered a collapse? Up nearly 150% in 6 years, down 13% in a year COLLAPSE!

  39. 39
    Blake says:

    RE: greg @ 35
    Greg, what’s your reasoning that this 10-20% drop in stocks “will be followed by a big gain.”
    Why? ‘cuz the world economy is sooooo good!?
    … ‘cuz stocks are undervalued vs. P/E ratios?
    … ‘cuz the central banks are always going to print more money to keep the speculators going?
    Just curious?

    btw: Just over two weeks ago El-Erian wrote this…
    http://www.bloombergview.com/articles/2016-01-24/a-new-mindset-for-a-shifting-global-economy
    “Moreover, the longer central banks continue to fill their role of the past decade as the “only game in town” — that is, following policies dedicated to repressing market volatility and artificially boosting asset prices — the greater the subsequent risk to their effectiveness and operational autonomy.”
    … me thinks that this is coming to pass. Central banks are losing control of interest rates and are out of bullets.
    Asset prices have been artificially boosted… stocks and – yes – real estate! Who knows what the “real” value may be, but Mr. Market usually perseveres and we find out… after overshooting a bit! sh*t happens…

  40. 40
    ess says:

    By wreckingbull @ 37:

    RE: ess @ 5 – No bubbly activity to see up there, now is there. Why do these stories of fraud sound so vaguely familiar?

    http://www.vancouversun.com/business/some+real+estate+agents+insider+trading+helping+money/11705662/story.html

    Those allegations may or may not prove to be relevant, but density is still coming to Seattle.

  41. 41
    boater says:

    RE: Blake @ 39
    I personally wouldn’t say we are in for a big gain but I also don’t see a massive drop. Nothing you’ve mentioned is new. It’s not like 2007-8 where people were for the most part unaware of how housing was being financed. The forward P/E estimate is around 16. Still a bit high but nothing excessive. Beyond that the US consumer should see actual consumption rise a some fractional rate to the drop in oil price. Taxes, labor costs, etc mean it won’t be a 1:1 ratio but for the vast majority of Americans they will see an effective income increase due to lower fuel costs. Our strong dollar makes imports cheaper further adding to disposable income. The most amusing thing to me is the millennials who’ve abandoned cars won’t see much of this and their small living spaces suggest they won’t be buying to fill the void. I’m a bit curious if they will jump ship from cities and start moving to suburbs where housing is cheaper.

    They have at least one more tool they haven’t unleashed but might. They have the option to stop requesting printed money and switch pure electronic money at least for large denominations. If they do that and go to a negative interest rate they have a way to remove money from the money supply.

  42. 42
    greg says:

    RE: Blake @ 39

    Well Blake it is easy. That is pretty much what always happens. it is by far the most likely course of events thus the one I will follow.

    As to the economy, well that pattern is NOT going away unless we have a major shift in global economic polices. whether or not the stock markets increase in value or decrease in value we are going to continue to have masses of people in financial pain and living with little to no job security. We are a winner takes all nation and state, of that there is no doubt.

  43. 43
    boater says:

    RE: greg @ 42
    Well we’ll see. If Bernie wins we’ll see what an ideolog on the left with as strong convictions as the ideologs on the right can do to change that winner take all status.

    I personally do see much chance of him succeeding whether he is president or not but he would make for interesting times.

    If it really comes down to Bernie or Trump I think I’ll just stick my head in the sand for four years and see if the world returns to something resembling sanity.

  44. 44
    Blake says:

    RE: boater @ 41
    Ummm… “Blake… Nothing you’ve mentioned is new.”
    Really??
    $7 trillion now invested in bonds earning negative returns?
    Central banks running up against the ZIRP-zero bound with no monetary measures left to “goose” the economy, short of dropping money to people from helicopters?
    http://www.economist.com/blogs/buttonwood/2014/11/reviving-economy
    “So what about a different approach? The idea of a helicopter money drop has been mooted by Milton Friedman and Ben Bernanke, among others.”

    That was 16 months ago… Finland is already doing it:
    http://www.zerohedge.com/news/2015-12-06/it-begins-desperate-finland-set-unleash-helicopter-money-drop-all-citizens
    …this is a deeper and more protracted slump than the post-Soviet crash of the early 1990s, or the Great Depression of the 1930s. And so, having tried it all, Finnish authorities are preparing to unleash “helicopter money” to save their nation by giving every citizen a tax-free payout of around $900 each month!”

    Nothing NEW to see here… same old same old!

    Fact is… Europe has experienced a depression much worse than the 30s and they are nowhere near out of the woods. The US, Japan and China were able to print our own currencies to “paper over” the problems, but consumer demand has never recovered and neither has business investment. The economy died in 2008 and was put on CPR with massive blood/money transfusions, but it is still in the ICU on life support from extraordinary measures by the central banks! No takeoff in sight!
    Google: “secular stagnation”… or just go here:
    http://larrysummers.com/category/secular-stagnation/
    He’s an a*hole, but he’s right!

  45. 45
    Blake says:

    RE: boater @ 43
    Re: “If it really comes down to Bernie or Trump I think I’ll just stick my head in the sand for four years and see if the world returns to something resembling sanity.”

    So boater… you pine for those days when those “sane” centrists guided us so cautiously into Iraq, deregulated Wall Street and then couldn’t find any individuals to indict after 2008? The status quo usually wins out… and that’s what frightens me. Empires die because of corruption and entrenched interests. At least Bernie would shake things up… but he doesn’t have a chance in hell because the people who own the “Democratic” Party would rather destroy the party than let he and the grass roots rise up. Hillary will win, and if she is up against Trump, she’ll get all the big money from the Neo-Con warmongers and Wall Street behind her!
    Business as usual! don’t worry… ;-(

  46. 46
    Blake says:

    The status quo… this is why so much money is invested in keeping things from changing:

    “Americans pay more for pharmaceuticals than the citizens of any other advanced nation, for example. We also pay more for Internet service. And far more for health care.

    We pay high prices for airline tickets even though fuel costs have tumbled. And high prices for food even though crop prices have declined.

    That’s because giant companies have accumulated vast market power. Yet the nation’s antitrust laws are barely enforced.

    Meanwhile, the biggest Wall Street banks have more of the nation’s banking assets than they did in 2008, when they were judged too big to fail.

    Hedge-fund partners get tax loopholes, oil companies get tax subsidies, and big agriculture gets paid off.

    Bankruptcy laws protect the fortunes of billionaires like Donald Trump but not the homes of underwater homeowners or the savings of graduates burdened with student loans.

    A low minimum wage enhances the profits of big-box retailers like Walmart, but requires the rest of us provide its employees and their families with food stamps and Medicaid in order to avoid poverty – an indirect subsidy of Walmart.

    Trade treaties protect the assets and intellectual property of big corporations but not the jobs and wages of ordinary workers.”
    http://robertreich.org/post/138894376115
    It’d be a shame if Bernie (or even Trump!?) disrupted these Parties…

    “This system is not sustainable. We must get big money out of our democracy, end crony capitalism, and make our economy and democracy work for the many, not just the few. But change on this scale requires political mobilization.”

  47. 47

    http://www.smeal.psu.edu/ires/single-family-rental-securitizations-spring-2015

    Remember CDO’s with mortgages — welcome to CDO’s for rents.

    Welcome to the hype machine — real estate firms and investors feeding on the hype in rentals and property prices to keep lease/rental securitization sustained until people start moving out faster than the terms estimate.

    “It’s not like last time — ”

    Yes it is — it’s just as greedy if not more so, there are no returns other than real estate in select markets and tech and tech is popping.

    Silly realtors — haven’t you learned from financial advisors? Take the high road — tell the Chinese cash buyers that they could lose their money.

    NYC and Miami attracted the interest of the Federal Government to fight criminal activity in real estate markets — you can bet they already are looking at San Francisco, LA, Seattle and Portland. I welcome these investigations whole heartedly and wish the real estate firms, blogs and agents were held to the same standards as finance and most likely if a rental issue occurs like the mortgage meltdown, the industry will become regulated as it should be against hype and pump-and-dump schemes. Buyers will gain the upper hand making for a fairer market.

    Fight the hype — it’s time to get real. Seattle is nowhere near the size and population of LA, Orange County and NYC. It also has nearly no rail transit and is laughable.

  48. 48
    boater says:

    RE: Blake @ 46
    Iceland and Finland. Two countries combined who’s GDP is less than Washington state with a roughly similar population. Sorry this is not something I’m going to base my financial decisions on. It’s like saying I should sell it all because Seattle wants to build a crazy tunnel. I suspect financially it’s on the same level.

    The EU is a messed up experiment. Germany is the ultimate winner of this experiment but doesn’t even acknowledge how they’ve benefited. The various countries need to have the flexibility to value their currencies appropriate to their productivity.

    Yes we have issues. Medicare should be able to negotiate for better drug prices. Paying by procedure vs by results is fraught with peril but so will pay by results. An overhaul is needed but I suspect much of it will come again by technology automating the most expensive portions for productivity gains.

    Airlines havent dropped price most likely due to fuel hedging. As that unwinds we will see a battle between lower fuel costs and potentially higher labor costs.

    wages are beginning to go up. IWalmart does abuse welfare, food stamps etc. Something needs to be done there.

    I don’t see enough to overcome a positive bias.

  49. 49

    RE: Blake @ 46
    I Bet Even Trump Would Agree With Your Statement Regarding Him, He’s a By the Facts Only Businessman

    Its like Illegal Aliens (IAs) in a sanctuary city like Seattle, I may or may not support them being here….but irrespective, I imagine they have Seattle home construction skills superior to training new [higher paid?] American citizen ones. I pay for the IA chain migration [wives, children, parents, etc] schooling, family social services, etc through increased property taxes, etc…..why shouldn’t anyone use the slave labor then?

    Same with a bad bankruptcy law on big downtown real estate, federal deficit funds down the toilet.

  50. 50
    Joe says:

    The only “game changer” I see is the continuing stock market deflation, which will spread to housing soon. Expect investors to favor cash over real estate.

  51. 51
    Joe says:

    If you can’t afford to lose 20% on a house you shouldn’t be buying a house at this time.

  52. 52

    RE: Blake @ 45
    Trump Stole the Democrat Women Vote?

    Snippet:

    “…;Stone says that the PAC will have no affiliation with any presidential candidates but he thinks Trump, for whom he used to work as a strategist (Trump says Stone was fired while Stone insists he quit), will win the Republican nomination.

    “In boxing you call that leading with your chin,” Stone said, referring to Bill Clinton’s recent comments about Sanders’s sexism. “As long as he starts accusing other people of sexism, then he’s really asking for a full exposition of his record.”

    At this point, Willey is the only Clinton accuser on board with Stone’s agenda, or at least the only person publicly discussing the plans of attack. While she says she hasn’t endorsed Trump, or for that matter talked to Jones, Willey was happy that the leading contender for the Republican nomination is making an issue of the sex-assault allegations against Bill Clinton.

    “Thank God [Trump] did,” Willey said in an interview. “I thanked him publicly for having the nerve to ask the hard questions. You get all of this stuff from the feminists—[that] it’s unimportant and it shouldn’t matter. That’s just plain wrong. [Hillary] has enabled this behavior of his for almost 40 years now.”…”

    http://www.thedailybeast.com/articles/2016/02/09/bill-clinton-s-bimbos-flock-to-team-trump.html

    I agree….whether it be Bernie or Hillary…..with Trump running as the Rep nominee, they’ll be toast in an election.

  53. 53
    Blake says:

    RE: softwarengineer @ 52
    Re: “whether it be Bernie or Hillary…..with Trump running as the Rep nominee, they’ll be toast in an election.”
    SWE you forget two major obstacles for Trump…
    #1. The demographics are running against the Republicans…. the electorate is increasingly non-white… the Latino vote is a big problem for the Repugs, and a nightmare for Trump! I also don’t think he’ll do well among women.
    #2. More importantly, the Republican establishment will sabotage Trump. He threatens their hold on Party power, he speaks out against their precious “free trade” deals, criticizes Wall Street, is fairly isolationist in foreign policy, and has not kowtowed to the Israel Lobby. If Hillary is the nominee, the foreign policy elites and Wall Street power brokers will line up behind her… for money and more war!
    (I do like how Trump has shaken up the Repugs! They’ll do everything they can to deny him the nomination! It will get ugly.)

  54. 54
    Blake says:

    This is great! Former Bush speechwriter David Frum nails it! About what happened in New Hampshire last night…
    http://www.theatlantic.com/politics/archive/2016/02/democracy-won-in-new-hampshire/462129/

    “On the Republican side, the upset was, if possible, even more stunning. For 20 years and more, Republican presidential contests have operated as a policy cartel. Concerns that animate actual Republican voters—declining middle-class wages, immigration, retirement security—have been tacitly ruled out of bounds. Concerns that excite Republican donors—tax cuts, entitlement reforms—have been more-or-less unanimously accepted by all plausible candidates. Candidates competed on their life stories, on their networks of friends, and on their degree of religious commitment—but none who aspired to run a national campaign deviated much from the economic platform of the Wall Street Journal and the Club for Growth.

    This year’s Republican contest, however, has proved a case study of Sigmund Freud’s “return of the repressed.” Republicans, it turns out, also worry about losing health care. They also want to preserve Social Security and Medicare in roughly their present form. They believe that immigration has costs, and that those costs are paid by people like them—even as its benefits flow to employers, investors, and foreigners. They know that their personal situation is deteriorating, and they interpret that to mean (as who wouldn’t?) that the country is declining, too. “Hope,” “growth,” “opportunity,” “choice”—those have long since dwindled to sinister euphemisms for “less,” “worse,” and “not for you.”

    More than $110 million was invested in a single campaign to silence all those internal doubts. Between them, the so-called “establishment lane” candidates spent a combined $81.8 million of campaign and super PAC funds in New Hampshire alone. And what did it all buy? Everything that was supposed to be out is suddenly in. Everything that was supposed to be silenced is suddenly being said.

    It may not last, not on either side. As Romney campaign manager Stuart Stevens likes to remind over-excited pundits, “the casino may not always win—but that’s the way to bet.” Very possibly the normal probabilities of politics—and the weight of money—will reassert themselves as the presidential campaigns broaden to national scale. But something that had been stuck was shaken ajar last night. Amid all the shocked headlines, the most important news of the night may be: For once, the system worked.”

    … but the peasant are indeed restless. Can the Dem and Rep establishment get them back in line!?

  55. 55
    Blurtman says:

    By Blake @ 54:

    Can the Dem and Rep establishment get them back in line!?

    You may not recall how angry people were back in the days of the S&L fraud where even Republican stalwarts like John McCain tried to put the curtain back in place over the great Oz. Now we have the internet, and the fraud is much worse and more brazen. Americans are slowly getting it that Fed members are criminal institutions who get free money that they make everyone else pay for. The flesh of the corrupted corpse is peeling off, and the funeral attendees are holding their noses and pretending that all is well. Let’s look at Hillary. One of her campaign spokespersons, Emily Tisch Sussman, is a trust fund baby who is trying to explain how Hillary connects with student loan indebted and un- or marginally employed young women. Brilliant!

  56. 56
    MD says:

    Not to be a nag, as y’all are free to comment on whatever you like, but… Can you take the chatter on the presidential campaign elsewhere?

    I come to this site specifically for commentary on the local housing market, and I see the presidential election having little to no impact here.

  57. 57
    Ross says:

    By Blake @ 53:

    RE: softwarengineer @ 52
    Re: “whether it be Bernie or Hillary…..with Trump running as the Rep nominee, they’ll be toast in an election.”
    SWE you forget two major obstacles for Trump…
    #1. The demographics are running against the Republicans…. the electorate is increasingly non-white… the Latino vote is a big problem for the Repugs, and a nightmare for Trump! I also don’t think he’ll do well among women.
    #2. More importantly, the Republican establishment will sabotage Trump. He threatens their hold on Party power, he speaks out against their precious “free trade” deals, criticizes Wall Street, is fairly isolationist in foreign policy, and has not kowtowed to the Israel Lobby. If Hillary is the nominee, the foreign policy elites and Wall Street power brokers will line up behind her… for money and more war!
    (I do like how Trump has shaken up the Repugs! They’ll do everything they can to deny him the nomination! It will get ugly.)

    Trump has a solid base around 25-40% (Depending on state), which is significant. However, I think the remaining republican voters are in the “anyone but trump” category. RIght now, with so many contestants, the anyone but trump vote gets split into small chunks. As more and more republican candidates leave the race, I think the anyone but Trump voters will eventually consolidate, and Trump’s vote won’t grow significantly beyond what it is now. It will be an interesting battle, for sure.

  58. 58
    Blake says:

    By MD @ 56:

    Not to be a nag, as y’all are free to comment on whatever you like, but… Can you take the chatter on the presidential campaign elsewhere? I come to this site specifically for commentary on the local housing market, and I see the presidential election having little to no impact here.

    RE: MD @ 56

    Sorry MD… the chatter revolved around the precarious state of the economy and what might be coming down the pipe at us, but after some comments about how Bernie or Trump might upset the status quo we got off track! :-)

  59. 59

    By Kary L. Krismer @ 9:

    In Dick Beeson’s defense, he’s talking about a broader area than King County. On other other hand, I don’t know that the other counties have the same inventory issues, because I haven’t looked at more than four recently, and even then I haven’t been looking at total inventory.

    I have been looking down in Thurston County since writing the above. The inventory situation down there seems much better–not bad at all really.

  60. 60

    Boeing is Finally Coming Out of the Closet on its Recent Stealth 8K Lay-offs in Seattle

    That’s about 9.2% job numbers decrease leading to today’s recent shrinking Seattle workforce of about 79K…..you heard the news first on Seattle Bubble. News is planning power and they masked it from us too long. More layoffs to come Boeing announces:
    http://www.seattletimes.com/business/boeing-aerospace/job-cuts-planned-at-boeing/

    In about a year, when their unemployment runs out…..look for more listings and foreclosures?

  61. 61

    RE: Blake @ 53
    I have a Best Friend, She’s a Latina from Dallas

    She served on caucuses for Hillary in 2008. She called me and adamantly commented to me, “I want Donald Trump”…..Most of the of African American middle class [+250K incomes, i.e.] in the Seattle area that I talk to support Trump too. Turn off the Establishment MSM and get the truth from the bottom 95%. The MSM would never admit the CRITICAL truth, they do it with the phony unemployment numbers too. Asians for Trump too. SWE has plenty of minority race friends that support demographic planning and taking our jobs back from Japan, Mexico and China…..the single issue that only a Trump businessman addresses….the root cause. The other candidates are useless on this solution to our economic woes and our real 25%-30% unemployment rate with give ups.

    The race of legal American citizens was never the issue. Illegal aliens are a different matter, but don’t vote anyway.

  62. 62

    By MD @ 56:

    Not to be a nag, as y’all are free to comment on whatever you like, but… Can you take the chatter on the presidential campaign elsewhere?

    If you have a general dislike of the presidential campaign, I’d suggest getting a DVR. That way you can fast-forward through all the nonsense.

  63. 63
    Cap''n says:

    RE: softwarengineer @ 61

    Check your email account. You might have been hacked. Check that. I hope you were hacked.

  64. 64
    Blurtman says:

    By softwarengineer @ 61:

    RE: Blake @ 53
    I have a Best Friend, She’s a Latina from Dallas

    The race of legal American citizens was never the issue..

    For the record, Latina(o) is not a race. Neither is the unprecedented category of Hispanic.

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